Laws covering trade between businesses in different countries have existed since the law merchant was born in the medieval period. As business has grown across national borders and business relations have deepened, the legal dimension of business has had to follow suit. All commercial transactions across borders exist within the framework of national legal systems.
Contract law: An agreement made between two or more parties who promise to perform or to not perform specified acts, which agreement creates for each party a legal duty and the right to seek a remedy for breach of that duty. It falls under the category of civil law (concerning relations between individuals or companies), although the state courts may intervene to settle dispute between conflicting parties.
In a dispute over a contract the person who has suffered loss (a plaintiff) may bring a claim for money compensation ‘damages’ or a range of other remedies against the defendant governed by the law of the country who carries out performance of the contract, unless specified in the contract.
International contract law concerns the legal rules relating to cross-border agreements. When parties from different countries enter into a contract, they are governed by international contract law unless they agree to abide by the laws of one of the countries. It is frequently applied to international sales contracts. This type of contract law is broadly based on the idea of good faith and fair dealing in contracts. These principles are the basis of contract law in most jurisdictions. Good faith includes fair negotiations, an obligation to cooperate and good faith when terminating a contract. It also ensures that unfair contracts or deals are not enforced. International sales contracts are governed by the United Nations Convention on Contracts for the International Sale of Goods from 1980. The convention was developed in the hopes of promoting international trade by developing a global set of rules for contracts. The convention is a compromise between legal systems of common law, civil law and socialist law. One key element of international contract law includes the provision that the parties' nationality does not play any role when applying the law, thereby placing all parties on an equal playing field. Rules of the contracts are interpreted by what a reasonable person would consider fair and appropriate given the circumstances. International contract law is a branch of private international law, which relates to the cross-border dealings of individuals or companies. This differs from public international law, which concerns the interaction between governments and other state agencies.
Principle of freedom of contract:
In contract law, there is a general principle of contractual freedom. This principle allows contracting parties to choose the law applicable to such relationships, but also in cases of dispute, to appoint the judge (by a jurisdiction clause) or the appropriate arbitrator. Freedom of contract applies of course to international commercial contracts. This freedom of contract bonus, in that it will consider the provisions of the contract as the law of parties. But the contractual freedom has limits:...